Bailey v. The Fredonia Gas Company
| Decision Date | 11 June 1910 |
| Docket Number | 16,591 |
| Citation | 109 P. 411,82 Kan. 746 |
| Parties | A. W. BAILEY et al., as Partners, etc., Appellees, v. THE FREDONIA GAS COMPANY, Appellant |
| Court | Kansas Supreme Court |
Decided January, 1910.
Appeal from Wilson district court; JAMES W. FINLEY, judge.
SYLLABUS BY THE COURT.
1. CONTRACTS--Severable or Entire--Drilling Wells--Time of Payment. A provision of a written contract that one party shall drill a certain number of wells, and in case gas is found in any or all of them in paying quantities the other party shall own and possess such well or wells by paying the cost of drilling the same, implies that a payment is due whenever a paying well has been drilled.
2. CONTRACTS--Abandonment--Action to Recover for Part Performed. Where under such a contract a payment has become due, but the party liable therefor refuses to make it contending that nothing need be paid until all the wells are completed, the party entitled to receive it has a right to abandon further work and sue for that already done.
3. CONTRACTS--Limitation of Actions. Such an action is one upon the contract, and the statute of limitations applicable thereto is that relating to agreements in writing.
J. T Cooper, H. P. Farrelly, and T. R. Evans, for the appellant.
P. C. Young, for the appellees.
The Fredonia Gas Company held a number of oil-and-gas leases. It entered into a written contract concerning them with two individuals, who afterward assigned their interests to the Illinois-Kansas Oil and Gas Company. The last-named company performed some work under the contract, on account of which it claimed that the other company became indebted to it in the sum of $ 1154.75. It owed the firm of Bailey & Kammerer $ 1046.42 upon a judgment, to secure the payment of which it assigned to them its claim against the Fredonia Gas Company. The firm sued and recovered thereon, and the defendant appeals. No serious question is raised as to the sufficiency of the assignment of the claim to Bailey & Kammerer, and none at all as to the assignment of the rights of the individual contractors to the Illinois-Kansas company. For simplicity in statement the case will be treated as though the contract had been made by the two companies, and as though this litigation were between them, the legal questions involved being the same as though that were the actual situation. The Fredonia company will be spoken of as the gas company and the Illinois-Kansas company as the oil company.
The substance of the contract was that the oil company was to drill five wells upon the land covered by the leases. Any well which produced oil was to belong to the oil company. Any well which produced gas in paying quantity, which was defined to mean at least 1,000,000 cubic feet a day, was to belong to the gas company, upon payment to the oil company of the actual cost of drilling. The oil company drilled two wells which proved unproductive. According to its own evidence it then drilled a paying gas well, which the gas company accepted, but the cost of which it refused. to pay upon the ground that no payment was due until all five wells had been drilled. On account of the dispute on this point, and consequent nonpayment of the cost of the third well, the oil company abandoned further operations. The gas company itself drilled the remaining two wells, which proved unproductive. At the trial it contended that the third well was not a paying one within the terms of the contract, and that the oil company had abandoned work because of a difficulty with its contractors, but the jury found against these contentions.
The substantial legal question in dispute is whether under the contract the oil company had a right to demand payment for the expense of drilling the third well before it drilled the fourth and fifth, and whether upon a refusal of payment it had a right to abandon further operations upon that account. The exact language of the agreement, so far as here material, is:
The contract did not say in so many words that the cost of a paying well drilled by one party but falling to the ownership of the other was to be paid upon its completion, but that is the fair implication. No other time of payment was mentioned or suggested. If a paying gas well was drilled by the oil company, the gas company did not have...
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Rupe v. Triton Oil & Gas Corp.
...Fe Ry. Co., 98 Kan. 478, 483, 158 P. 859 (1916) (statute ran separately as to each separate shipment of cars); Bailey v. Fredonia Gas Co., 82 Kan. 746, 109 P. 411 (1910) (single contract for drilling wells was severable as to each well, and payment was due whenever paying well had been dril......
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...materials and labor in the performance of a construction contract, or a collateral security for other indebtedness. Bailey v. Fredonia Gas Co., 82 Kan. 746, 109 P. 411; Hall v. Kansas City Terra Cotta Co., 97 Kan. 103, 154 P. 210, L.R.A.1916D, 361; and Citizens State Bank of St. Francis v. ......
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Cottrell v. Weinheimer
...for the completion of the contract or without further performing any other portion thereof.' To the same effect see Bailey v. Fredonia Gas Co., 82 Kan. 746, 109 P. 411, 413, wherein that court, quoting from Canal Company v. Gordon, 73 U.S. 561, 18 L.Ed. 894, stated: "In a contract to make a......